Annual Report on EL 26231 Unca Creek, for year ending 14 February 2010

Abstract

No on-ground exploration activity occurred during the last reporting period. EL 26231 was granted to Arafura Resources on 15 February 2008 for a period of six years. EL 26231 is part of Arafura's Jervois project area in the eastern part of the Aileron Province in the Arunta Region, Northern Territory. The license area was acquired because this area may have potential to host mineralisation styles akin to those on adjacent tenements. During the last term of grant, Arafura attempted to expedite exploration activities on its Jervois project area tenements via a JV agreement. Under a $8 million Letter of Intent executed on 17 April 2009, Arafura Resources and Jiangsu East China Exploration (ECE) entered into negotiations for JV covering Arafura's Jervois tenements. Unfortunately ECE did not meet its obligations and on 22 February 2010, Arafura advised the ASX that both parties had agreed to discontinue discussions on the proposed Jervois JV. To date, Arafura's exploration activities in the Jervois area have primarily focused on exploration and assessment of Fe-V resources at the Unca prospect in the adjacent EL 10215. EL 26231 may host similar mineralisation as geological units and untested regional magnetic targets occur in EL 26231. The acquisition of a detailed geophysical survey and modeling of that data to generate exploration targets is proposed.